Democrat on Democrat: Warren spars with Manchin on student loan proposal

Liberal firebrand Sen. Elizabeth WarrenElizabeth Ann WarrenThe Hill's Morning Report — After contentious week, Trump heads for Japan On The Money: Senate passes disaster aid bill after deal with Trump | Trump to offer B aid package for farmers | House votes to boost retirement savings | Study says new tariffs to double costs for consumers Overnight Energy: Democrats ask if EPA chief misled on vehicle emissions | Dem senators want NBC debate focused on climate change | 2020 hopeful John Delaney unveils T climate plan MORE (Mass.) blasted a fellow Democratic senator Tuesday as a dispute over student loan rates escalated divisions within the party.

The clash, which is highly unusual among party colleagues in the upper chamber, came at a private caucus meeting about a subject that is helping Republicans land blows against their Democratic opponents.

“Elizabeth came out very strong against Manchin,” said a Democratic senator who requested anonymity to discuss the exchange. “She said, ‘They’re already making money off the backs of students, and this adds another $1 billion.’”

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Warren was referring to a deal Sen. Joe ManchinJoseph (Joe) ManchinThe Hill's Morning Report - Trump says no legislation until Dems end probes Senate panel approves Interior nominee over objections from Democrats Labor head warns of 'frightening uptick' in black lung disease among miners MORE (D-W.Va.) and two other members of the caucus, Sens. Tom CarperThomas (Tom) Richard CarperOvernight Energy: Democrats ask if EPA chief misled on vehicle emissions | Dem senators want NBC debate focused on climate change | 2020 hopeful John Delaney unveils T climate plan Democrats suggest EPA chief misled on vehicle emissions rollback Overnight Energy: EPA watchdog finds Pruitt spent 4K on 'excessive' travel | Agency defends Pruitt expenses | Lawmakers push EPA to recover money | Inslee proposes spending T for green jobs MORE (D-Del.) and Angus KingAngus Stanley KingSenate panel approves Interior nominee over objections from Democrats Trump, Europe increasingly at odds on Iran The Hill's 12:30 Report: Dems raise stakes with talk of 'constitutional crisis' MORE (I-Maine), struck with Republicans to peg student-lending rates to the 10-year Treasury notes. 

Sen. Tom HarkinThomas (Tom) Richard HarkinStop asking parents to sacrifice Social Security benefits for paid family leave The FDA crackdown on dietary supplements is inadequate Wisconsin lawmaker refuses to cut hair until sign-language bill passes MORE (D-Iowa), the chairman of the Health, Education, Labor and Pensions Committee, stood up to announce to colleagues that a fact card passed out by Manchin summarizing his proposal contained two mistakes.

Harkin disputed Manchin’s claim that, under the bipartisan proposal, the interest rates for new Stafford loans would be 3.66 percent. Harkin said that claim failed to reflect that under the Manchin proposal, the rates on undergraduate Stafford loans would hit 7.1 percent by 2019.

Under the law that expired on July 1, the rate for subsidized Stafford loans was 3.4 percent. It has jumped to 6.8 percent and will remain at that level until Congress acts.

Harkin also hit Manchin for claiming the bipartisan plan places a cap on interest rates.

The bipartisan proposal in the Senate would cap student loan rates at 8.25 percent, but only for consolidated loans, not individual ones.

Manchin and his allies, Carper and King, pushed back against the pressure. They took the rare step of holding a competing press conference with reporters in the Ohio Clock corridor while Senate Majority Leader Harry ReidHarry Mason ReidLobbying World Mitch McConnell is not invincible Seven big decisions facing Biden in 2020 primary MORE (D-Nev.) touted a separate Democratic proposal to reporters. That plan, sponsored by Sen. Jack ReedJohn (Jack) Francis ReedSenate panel advances Trump's Space Force Senate panel rejects Trump plan to skirt budget caps, advances defense bill that backfills wall money Overnight Defense: Iran worries dominate foreign policy talk | Pentagon reportedly to send WH plans for 10K troops in Mideast | Democrats warn Trump may push through Saudi arms sale | Lawmakers blast new Pentagon policy on sharing info MORE (D-R.I.), would freeze the rate for subsidized Stafford loans at 3.4 percent for another year.

The bipartisan plan endorsed by Manchin and the others would set interest rates for undergraduate Stafford loans at the 10-year Treasury rate plus 1.85 percent. It would set the rates for unsubsidized graduate Stafford loans at the 10-year Treasury rate plus 3.4 percent.

It would reduce the deficit by $1 billion over 10 years, which Warren and other liberals have characterized as balancing the budget on the backs of students.

The rival messages appeared to exasperate Sen. Charles SchumerCharles (Chuck) Ellis SchumerNo agreement on budget caps in sight ahead of Memorial Day recess Ex-White House photographer roasts Trump: 'This is what a cover up looked like' under Obama Pelosi: Trump 'is engaged in a cover-up' MORE (N.Y.), the Senate Democratic messaging chief, who engaged in an animated conversation with Manchin, Carper and King before they met with reporters.

Reid tersely described Tuesday’s caucus meeting as “lively.”

While Manchin, Carper and King stood only a few yards down the ornate corridor outside the Senate chamber, Reid drew a line, declaring he would only back a plan that guarantees student loan rates will remain below the current 6.8-percent rate.

“I’ve told my caucus, I’ve told individual senators, if you can explain to me why doing something is better than doing nothing, then we’ll do it,” he said. “All the proposals, within two years, at the outside three years, make the rate more than 6.8 percent.”

Backers of tying the loan rates to Treasury bonds point out that it would result in lower rates now, but Reid said that interest rates are just now beginning to rise from all-time lows, with nowhere to go but up.

“We have the lowest interest rates we’ve had in the history of this country,” he said. “Interest rates are going to go up, and who’s going to suffer from that? Students.”

 After speaking to reporters, Reid planned to meet with Education Secretary Arne DuncanArne Starkey DuncanHow Democrats learned to stop worrying and love teachers Obama Education Secretary: US education system is 'top 10 in nothing' Obama Cabinet official: Trump doesn’t want educated workforce MORE and White House chief of staff Denis McDonoughDenis Richard McDonoughPaul Ryan joins University of Notre Dame faculty Senate Intel leaders ask judge not to jail former aide amid leak investigation Live coverage: Justice IG testifies before House on report criticizing FBI MORE to further discuss the matter.

Manchin and Carper said they hoped their proposal would receive a vote on the Senate floor, but Harkin said that would not happen Wednesday.

“Why should there be a side-by-side?” he said.

Harkin said Manchin could offer his plan as an amendment if the Senate votes to proceed on the Democratic alternative freezing the rate for subsidized Stafford loans at 3.4 percent for one year.  

The Senate will vote Wednesday to end debate on the motion to proceed to that measure.

Proponents of a one-year freeze of the lower, 3.4 percent rate argued ahead of the floor vote that Congress should tackle the rate as part of comprehensive reforms to higher education, coming as part of the reauthorization of the Higher Education Act.

“It will give us time to look at student lending in a comprehensive way,” said Reed.

There were indications Tuesday that Democrats were looking for some sort of compromise, and some may be enticed to join the market-based approach pushed by Manchin and others. Sen. Claire McCaskillClaire Conner McCaskillLobbying world Big Dem names show little interest in Senate Gillibrand, Grassley reintroduce campus sexual assault bill MORE (D-Mo.), said she could back student loan interest rates based on market movements as long as there are sufficient caps on the rates.

“We might find a sweet spot if we could do a little bit of market, a little bit of caps, and see if we can’t put together a bipartisan group on that,” she said.

And Sen. Bob CaseyRobert (Bob) Patrick Casey2020 Dems put spotlight on disabilities issues Why Congress needs to bring back tax deduction for worker expenses Biden cements spot as 2020 front-runner MORE Jr. (D-Pa.), who is a co-sponsor on Reed’s one-year freeze bill, said he was very interested in finding a longer-term solution.

“I’m willing to listen to anything,” he said. “I think it’s vital we start trying to move forward on a longer-term plan.”

Despite the efforts of Manchin and King, it was clear that some liberal lawmakers would not be swayed.

Sen. Bernie SandersBernie Sanders2020 Democrats join striking McDonald's workers Billionaire's M gift to Morehouse grads points way to student debt solution Poll: Nearly half of Clinton's former supporters back Biden MORE (I-Vt.), a strong proponent of freezing the lower rates, called the bipartisan bill “totally insane.”

“The American people would laugh at that. It’s not a proposal,” he told The Hill, adding that the administration’s push for a market-based student loan rate is also a nonstarter.

“We should make sure working families in this nation can afford college,” he said. “The White House’s proposal is absurd as well.”

Meanwhile, Senate Republicans looked to keep up pressure on Democrats, again highlighting that the White House has also called for student loan rates tied to Treasury bonds.

Sen. Lamar AlexanderAndrew (Lamar) Lamar AlexanderOvernight Health Care — Presented by PCMA — Senators unveil sweeping bipartisan health care package | House lawmakers float Medicare pricing reforms | Dems offer bill to guarantee abortion access Bipartisan senators reveal sweeping health care package Collins offering bill to boost battery research as GOP pushes energy 'innovation' MORE (R-Tenn.), who is a co-sponsor of the compromise bill, said a one-year freeze would leave students “twisting in the wind,” and make student loans a regular political football like the so-called “doc fix.”

— Published at 4:56 p.m. and updated at 8:23 p.m.